16. Indemnity.—
(1) Every Custodian of a corresponding new bank and every officer of the Central
Government or of the Reserve Bank and every officer or other employee of a corresponding new bank,
shall be indemnified by such bank against all losses and expenses incurred by him in or in relation to the
discharge of his duties except such as have been caused by his own wilful act or default.
(2) A director or member of a local board or committee of a corresponding new bank shall not be
responsible for any loss or expense caused to such bank by the insufficiency or deficiency of the value of,
1. Ins. by Act 64 of 1984, s. 5 (w.e.f. 11-9-1984).
2. Ins. by Act 30 of 2005, s. 34 and Part IX of the Schedule (w.e.f. 14-12-2006).
15
or title to, any property or security acquired or taken on behalf of the corresponding new bank, or by the
insolvency or wrongful act of any customer or debtor, or by anything done in or in relation to the
execution of the duties of his office, unless such loss, expense, insufficiency or deficiency was due to any
wilful act or default on the part of such director or member.
1
[16A. Arrangement with corresponding new bank on appointment of directors to
prevail.—
(1) Where any arrangement entered into by a corresponding new bank with a company
provides for the appointment by the corresponding new bank of one or more directors of such company,
such provision and any appointment of directors made in pursuance thereof shall be valid and effective
notwithstanding anything to the contrary contained in the Companies Act, 1956 (1 of 1956), or in any
other law for the time being in force or in the memorandum, articles of association or any other
instrument relating to the company, and any provision regarding share qualification, age limit, number of
directorships, removal from office of directors and such like conditions contained in any such law or
instrument aforesaid, shall not apply to any director appointed by the corresponding new bank in
pursuance of the arrangement as aforesaid.
(2) Any director appointed as aforesaid shall—
(a) hold office during the pleasure of the corresponding new bank and may be removed or
substituted by any person by order in writing of the corresponding new bank;
(b) not incur any obligation or liability by reason only of his being a director or for anything done
or omitted to be done in good faith in the discharge of his duties as a director or anthing in relation
thereto;
(c) not be liable to retirement by rotation and shall not be taken into account for computing the
number of directors liable to such retirement.]
17. Construction of references to existing banks.—Any reference to any existing bank in any law,
other than this Act, or in any contract or other instrument shall, in so far as it relates to the undertaking
which has been transferred by section 4, be construed as a reference to the corresponding new bank.
18. Dissolution.—No provision of law relating to winding up of corporations shall apply to a
corresponding new bank and no corresponding new bank shall be placed in liquidation save by order of
the Central Government and in such manner as it may direct.
2
[18A. Supersession of Board in certain cases.—
(1) Where the Central Government, on the
recommendation of the Reserve Bank, is satisfied that in the public interest or for preventing the affairs of
any corresponding new bank being conducted in a manner detrimental to the interest of the depositors or
the corresponding new bank or for securing the proper management of any corresponding new bank, it is
necessary so to do, the Central Government may, for reasons to be recorded in writing, by order,
supersede the Board of Directors of such corresponding new bank for a period not exceeding six months
as may be specified in the order:
Provided that the period of supersession of the Board of Directors may be extended from time to time, so,
however, that the total period shall not exceed twelve months.
(2) The Central Government may, on supersession of the Board of Directors of the corresponding
new bank under sub-section
(1), appoint, in consultation with the Reserve Bank, for such period as it may
determine, an Administrator (not being an officer of the Central Government or a State Government) who
has experience in law, finance, banking, economics or accountancy.
(3) The Central Government may issue such directions to the Administrator as it may deem
appropriate and the Administrator shall be bound to follow such directions.
(4) Upon making the order of supersession of the Board of Directors of the corresponding new bank,
notwithstanding anything contained in this Act,—
(a) the chairman, managing director and other directors shall, as from the date of supersession,
vacate their offices as such;
1. Ins. by Act 1 of 1984, s. 74 (w.e.f. 15-2-1984).
2. Ins. by Act 45 of 2006, s. 13 (w.e.f. 16-10-2006).
16
(b) all the powers, functions and duties which may, by or under the provisions of this Act or any
other law for the time being in force, be exercised and discharged by or on behalf of the Board of
Directors of such corresponding new bank, or by a resolution passed in general meeting of such
corresponding new bank, shall, until the Board of Directors of such corresponding new bank is
reconstituted, be exercised and discharged by the Administrator appointed by the Central Government
under sub-section
(2):
Provided that the power exercised by the Administrator shall be valid notwithstanding that such
power is exercisable by a resolution passed in the general meeting of the corresponding new bank.
(5) The Central Government may constitute, in consultation with the Reserve Bank, a committee
of three or more persons who have experience in law, finance, banking, economics or accountancy to
assist the Administrator in the discharge of his duties.
(6) The committee shall meet at such times and places and observe such rules of procedure as
may be specified by the Central Government.
(7) The salary and allowances payable to the Administrator and the members of the committee
constituted under sub-section
(5) by the Central Government shall be such as may be specified by the
Central Government and be payable by the concerned corresponding new bank.
(8) On and before the expiration of two months before expiry of the period of supersession of the
Board of Directors as specified in the order issued under sub-section
(1), the Administrator of the
corresponding new bank, shall call the general meeting of the corresponding new bank to elect new
directors and reconstitute its Board of Directors.
(9) Notwithstanding anything contained in any other law or in any contract, the memorandum or
articles of association, no person shall be entitled to claim any compensation for the loss or termination of
his office.
(10) The Administrator appointed under sub-section
(2) shall vacate office immediately after the
Board of Directors of the corresponding new bank has been reconstituted.]
19. Power to make regulations.—
(1) The Board of Directors of a corresponding new bank may,
after consultation with the Reserve Bank and with the previous sanction of the Central Government, 1[by
notification in the Official Gazette], make regulations, not inconsistent with the provisions of this Act or
any scheme made thereunder, to provide for all matters for which provision is expedient for the purpose
of giving effect to the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, the regulations may
provide for all or any of the following matters, namely:—
(a) the powers, functions and duties of local boards and restrictions, conditions or limitations, if
any, subject to which they may be exercised or performed, the formation and constitution of local
committees and committees of local boards (including the number of members of any such
committee), the powers, functions and duties of such committees, the holding of meetings of local
committees and committees of local boards and the conduct of business thereat;
(b) the manner in which the business of the local boards shall be transacted and the procedure in
connection therewith;
2
[(ba) the nature of shares of the corresponding new bank, the manner in which and the
conditions subject to which shares may be held and transferred and generally all matters relating to
the rights and duties of Shareholders;
(bb) the maintenance of register, and the particulars to be entered in the register in addition to
those specified in sub-section (2F) of section 3, the safeguards to be observed in the maintenance of
register on computer floppies or diskettes, inspection and closure of the register and all other matters
connected therewith;
1. Ins. by Act 66 of 1988, s. 38 (w.e.f. 30-12-1988).
2. Ins. by Act 37 of 1994, s. 17 (we.f. 15-7-1994).
17
(bc) the manner in which general meetings shall be convened, the procedure to be followed
thereat and the manner in which voting rights may be exercised;
(bd) the holding of meetings of shareholders and the business to be transacted thereat;
(be) the manner in which notices may be served on the half of the corresponding new bank upon
shareholders or other persons;
(bf) the manner in which the directors nominated under clause
(h) of sub-section
(3) of section 9
shall retire;]
(c) the delegation of powers and functions of the Board of Directors of a corresponding new bank
to the general manager, director, officer or other employee of that bank;
(d) the conditions or limitations subject to which the corresponding new bank may appoint
advisers, officers or other employees and fix their remuneration and other terms and conditions of
service;
(e) the duties and conduct of advisers, officers or other employees of the corresponding new
bank;
(f) the establishment and maintenance of superannuation, pension, provident or other funds for
the benefit of officers or other employees of the corresponding new bank or of the dependents of such
officers or other employees and the granting of superannuation allowances, annuities and pensions
payable out of such funds;
(g) the conduct and defence of legal proceedings by or against the corresponding new bank and
the manner of signing pleadings;
(h) the provision of a seal for the corresponding new bank and the manner and effect of its use;
(i) the form and manner in which contracts binding on the corresponding new bank may be
executed;
(j) the conditions and the requirements subject to which loans or advances may be made or bills
may be discounted or purchased by the corresponding new bank;
(k) the persons or authorities who shall administer any pension, provident or other fund
constituted for the benefit of officers or other employees of the corresponding new bank or their
dependents;
(l) the preparation and submission of statements of programmes of activities and financial
statements of the corresponding new bank and the period for which and the time within which such
statements and estimates are to be prepared and submitted; and
(m) generally for the efficient conduct of the affairs of the corresponding new bank.
(3) Until any regulation is made under sub-section
(1), the articles of association of the existing bank
and every regulation, rule, bye-law or order made by the existing bank in force immediately before the
commencement of this Act shall be deemed to be the regulations made under sub-section
(1) and shall
have effect accordingly and any reference therein to any authority of the existing bank shall be deemed to
be a reference to the corresponding authority of the corresponding new bank and until any such
corresponding authority is constituted under this Act shall be deemed to refer to the Custodian.
1
[
(4) Every regulation shall, as soon as may be after it is made under this Act by the Board of
directors of a corresponding new bank, be forwarded to the Central Government and that Government
shall cause a copy of the same to be laid before each House of Parliament, while it is in session, for a total
period of thirty days which may be comprised in one session or in two or more succcessive sessions, and
if, before the expiry of the session immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the regulation or both Houses agree that the regulation
should not be made, the regulation shall thereafter have effect only in such modified form or be of no
effect, as the case may be; so, however, that any such modification or annulment shall be without
prejudice to the validity of anything previously done under that regulation.]
1. Ins. by Act 1 of 1984, s. 75 (w.e.f. 15-2-1984).
18
20. [Amendment of certain enactment.]—Rep. by the Repealing and Amending Act, 1988
(19 of 1988), s. 2 and the First Schedule (w.e.f. 31-3-1988).
21. Repeal and saving.—
(1) The Banking Companies (Acquisition and Transfer of Undertakings)
Ordinance, 1980 (3 of 1980), is hereby repealed.
(2) Notwithstanding such repeal, anything done or any action taken, including any order made,
notification issued or direction given, under the said Ordinance shall be deemed to have been done, taken,
made, issued or given, as the case may be, under the corresponding provisions of this Act.
THE FIRST SCHEDULE
(See sections 2, 3 and 4)
Existing bank Corresponding New Bank
Column 1 Column 2
The Andhra Bank Limited … Andhra bank
Corporation Bank Limited … Corporation Bank
The New Bank of India Limited … New Bank of India.
The Oriental Bank of Commerce … Oriental Bank of Commerce
Limited
The Punjab and Sind Bank Limited … Punjab and Sind Bank
Vijaya Bank Limited … Vijaya Bank
__________
THE SECOND SCHEDULE
(See section 6)
Name of existing bank Amount
(in lakhs of rupees)
The Andhra Bank Limited ..... 610
Corporation Bank Limited ..... 180
The New Bank of India Limited ..... 510
The Oriental Bank of Commerce ..... 100
Limited
The Punjab and Sind Bank Limited ..... 210
Vijaya Bank Limited ..... 240
19
THE THIRD SCHEDULE
[See sub-sections
(2) and
(3) of section 13]
DECLARATION OF FIDELITY AND SECRECY
I....., do hereby declare that I will faithfully, truly and to the best of my skill and ability
execute and perform the duties required of me as Custodian, Director, member of Local Board,
member of Local Committee, auditor, adviser, officer or other employee (as the case may be) of
the*.....and which properly relate to the office or position in the said*.....held by me.
I. further declare that I will not communicate or allow to be communicated to any person not
legally entitled thereto any information relating to the affairs of the*.....or to the affairs of any
person having any dealing with the*.....; nor will I allow any such person to inspect or have
access to any books or documents belonging to or in the possession of the*.....and relating to the
business of the*.....or to the business of any person having any dealing with the*......................
*Name of corresponding new bank to be filled in.
20
